The slow road to high-speed broadband

Yet it seemed to happen in Westminster last week, when a House of Commons select committee condemned the government's plan to tax landline users with the aim of raising £1bn to subsidise the build-out of next-generation networks.

The Labour-dominated committee criticised Lord Carter's broadband tax as "regressive". But this wasn't simply an argument about taxation. The committee went further, arguing it could detect "no pent-up demand for super-fast broadband from consumers".

How far we've come in the space of a year. Last April, six months after the collapse of Lehman Brothers, academics from the London School of Economics and the Information Technology and Innovation Foundation recommended that HM Government should pour £5bn into next-generation broadband networks in order to create 280,000 jobs and boost economic growth.

In the panicky aftermath of the Great Crash, it didn't seem absurd to envisage Gordon Brown as a fibre-optic Roosevelt, corralling the jobless into sewers and ducts to enhance "long-term economic growth and international competitiveness" as well as the "quality of life" experienced by taxpayers.

The first knock-back came with the publication of Lord Carter's Digital Britain report. Carter took a "no child left behind" approach, emphasising the need to get everyone connected at 2Mbps. Levelling down to the lowest common denominator came with added benefits, including the prospect of expanded e-government and public sector job cuts.

By contrast, the £1bn to be raised by Carter's phone tax was an add-on, intended to bring next generation speeds to the "last third" of the population in rural areas by 2017.

Last week, MPs picked apart this apparently modest aim. They argued that it would be "unwise" for the Government to spend taxpayers' money until the market has decided what it can deliver "by itself". Delay, they added, might bring down the cost to taxpayers. (The unspoken subtext is hard to deny: fast followers always get the benefit of proven technology at lower cost.)

MPs also argued that the government should overhaul the bizarre system of taxes on fibre optic cables that benefits BT and hobbles competitors trying to build high-speed networks of their own. Notably, this mood music chimes with George Osbourne's belief that squeezing BT represents an alternative to investing taxpayers' cash in infrastructure.

Most of all, however, the MPs scanned the horizon for evidence of what people would do with all of that fibre-based bandwidth -- and came up with, well, not very much. At 900Kbps, the MPs noted, you can plaster iPlayer over a decent-sized TV screen. Why would anyone need 50Mbps?

It's the question that Sky likes to ask Virgin Media, which offers 50Mbps broadband and will launch a 100Mbps service by the end of the year. Sceptics ask the same of France Telecom, which is building out a fibre network, but only managed to sell 33,000 high-speed connections by last September.

Video underpins our lust for high-speed networks. But where's the money? Sky, like the US cable operators, is terrified by the prospect of alternative distribution platforms. But if consumers stop spending money on satellite and start spending it on IPTV, the net benefit for the economy as a whole will surely be minimal.

Of course, the killer apps will come. Many of them will be enjoyable, perhaps even useful. But most will be ad-funded. Once again, we confront the prospect of money being shifted from one pocket (broadcast networks) into another (probably Google's).

Hairdressers, educators and porn stars may benefit from high-speed videoconferencing. It's nice to imagine families and friends upgrading from grainy webcam images. Tellingly, however, the MPs didn't even mention videoconferencing in last week's report.

Before the crash, Aiden Paul, the chief executive of Vtesse, would have got away with telling a select committee that "people will find things to do with higher speeds". We all know what he means. Increasingly, however, build-it-and-they-will-come is not enough. And build-it-and-they-will-pirate-more-movies-illegally isn't likely to win over MPs, either.

Being able to download an HD film in a minute or two will have consequences. If government backs off from pressing the case for high-speed networks, Big Media will breathe a sigh of relief.